Proposed Rule to Implement New Statute
on the Prevention of Deposit Shifting

The FDIC Board of Directors has issued for public comment the
attached proposed rule on the recently enacted deposit-shifting statute, a
provision of the Deposit Insurance Funds Act of 1996. The statute requires
the FDIC, the Office of the Comptroller of the Currency, the Board of
Governors of the Federal Reserve System and the Office of Thrift Supervision
to take appropriate actions to prevent insured depository institutions and
their holding companies from facilitating or encouraging the shifting of SAIF-
assessable deposits to BIF-assessable deposits to evade assessments imposed
on SAIF-assessable deposits.

The proposed rule consists of two basic provisions:

Under the proposed rule, the federal banking
agencies would deny applications (or object to notices) if
the underlying transaction is for the purpose of evading
assessments imposed on SAIF-assessable deposits.

The proposed rule would establish a rebuttable
presumption under which entrance and exit fees would be
imposed upon depository institutions that engage in deposit
shifting for the purpose of evading assessments imposed on
SAIF-assessable deposits.

The FDIC believes that the proposed rule may be the most
effective means of enforcing the requirements of the deposit-shifting
statute without imposing an undue burden on depository institutions.

The FDIC requests comments on all aspects of the proposed
rule, particularly the following:

whether there are alternate means of implementing and
enforcing the deposit-shifting statute;

what factors should be considered in determining whether
prohibited deposit-shifting has occurred (i.e., what
conduct and activities of a depository institution the
FDIC should interpret as encouraging or facilitating
deposit-shifting); and

the meaning of the rule of construction provided in the
statute, which states the statute shall not be construed
as prohibiting conduct or activity "undertaken in the
ordinary course of business . . . and . . . not directed
towards the depositors of an insured depository
institution affiliate . . . ."

The FDIC will accept written comments on the proposed rule
through April 14, l997. For more information, please contact
Joseph A. DiNuzzo, Counsel, Legal Division, on (202) 898-7349;
Richard J. Osterman, Senior Counsel, Legal Division, on (202)
898-3523; or George Hanc, Associate Director, Division of
Research and Statistics, on (202) 898-8719.